3. Capitalism: Making Money with Money

Markets are networks of buyers and sellers using money to exchange goods and services. They are intrinsically democratic: all you need to participate is something to sell or the money to buy. Moreover, the market is based on movement: its proliferating connections cannot easily be contained by political organisation tied to a particular place. The extension of trade beyond the limits of locality has been a relatively benign means for the human economy to take on a global character in recent centuries (the less benign method being war and conquest, often in tandem with trade). It is not surprising then that the drive to form more democratic and inclusive societies has been linked with the expansion of markets. But there has always been a strong resistance to markets in ideology and practice. This has its roots in the interests which dominated agrarian civilisation; but it also arose from what markets became in reality.

In the first place, an institution which depends on the freedom to spend money can hardly be said to be democratic, when some people have so much more of it than others. Owners of lots of money, capitalists who now take the form of public corporations rather than private individuals, have come to dominate the market economy, making it an experience of profound inequality and unfreedom for most participants. The second point is that markets have been closely associated in the modern period with the development of nation-states which, in the 20th century, have concentrated impersonal power held against the people. To these social forces we should add the machine revolution which initially favoured the centralisation of economic and political power, leading to that alliance between money and bureaucracy which I call state capitalism. It is not surprising that, faced with the alienating forces of a capitalist world, many people took refuge in an anti-market ideology promising a society which would get rid of money altogether from the core of economic life, substituting for purchase and sale the administration of resources by public officials. But in practice this collectivist alternative converged on the model it rejected, relying on political and economic bureaucracies, as well as on machines and money, in ways that were often more unequal and oppressive than the original. [i]

The failure of communism, coming after four decades of the Cold War for global supremacy, coincided with a shift in the ideology of western capitalism. This was based on a recognition of the limits of welfare state bureaucracy and a revival of enthusiasm for the interplay of private interests in the market. The defeated peoples of Eastern Europe found themselves urged to embrace “privatisation” as an economic panacea, a policy which quickly revealed itself to be a recipe for private misery, public decay and criminal enterprise. Nor is the initial euphoria over the West’s “victory” in the Cold War much in evidence at the millennium. It is clear that markets are increasingly global, if only because of the extraordinary growth in the world market for money instruments. The communications revolution seems to have ushered in a virtual capitalism which is no longer securely grounded either in territorial states or in the exchange of real goods and services, being manifested rather as so many digits flashing between computer screens over the telephone wires. At the same time, over the last two decades, the gap between rich and poor has escalated at every level of world society, partly as a result of the decline of the state’s powers of intervention both nationally and internationally.

Given the replacement of state capitalism by a commitment to the market, at least as dominant ideology, and growing confusion over the proper place of public and private interests in the organisation of economic life, it would seem to be a good time to review the relationship between money, markets and political power in the modern era. The following two chapters take off from the idea that the age of mechanisation has been dominated by money capital in several successive forms. In Chapter 3 the emphasis is on the origins of market capitalism and the early theories which have shaped our understanding of the modern economy. Both John Locke and Karl Marx conceived of their times as an age of money which left humanity suspended uneasily between a past dependency on nature and the possibility of building a just society in the future. Their contrasting views on the relationship between markets and money in such a future underpins the division which almost brought the world to catastrophe in the Cold War, even though neither envisaged the forms of capitalism and socialism that the antagonists actually took.

I then draw on Marx’s work to define industrial capitalism’s principles in its first Victorian phase and on Max Weber for the most suggestive alternative approach. If Marx emphasised the exchange of labour for capital as “free” forms of property, Weber took a broader cultural line focusing on “rational enterprise”, the attempt to make the pursuit of uncertain economic futures more calculable. Both traced the origins of their idea of capitalism through the economic history of Britain; and their complementary theories are each indispensable to making sense of its continuing evolution. Before filling in intervening developments, which is the task of Chapter 4, this chapter takes the analysis in a more ethnographic direction, reflecting my own knowledge of the emergent patterns of capitalist enterprise in the non-western periphery. I argue that the evidence of Africa’s small-scale societies throws light on the original conditions of capitalism’s emergence in Europe, as living examples of processes which otherwise would be available to us only in dead theoretical texts. This in turn allows us to see the particular local variations which are always intrinsic to capitalism’s general development. The chapter concludes with a detailed exposition of my own West African research into the personal face of capitalism, entrepreneurs, in preparation for later explorations of the re-emergence of personality in economic life.

In contrast to this miniaturising approach, Chapter 4 returns to the broad outlines of 20th century history, to the formation of state capitalism and its decline as a result of conditions associated with the communications revolution. A major theme is the need to explain the growing gap between rich and poor regions of our world. This is taken up in a section dealing with the development of global inequality, especially in the period after the break-up of formal colonial empire. As a bridge between the first and subsequent phases of the machine revolution, I ask whether the classes identified by the political economists in the early 19th century help us to understand the struggle for the dividends of the internet today. These classes, based on control over the yields of the land, money capital and human creativity, derive their income from economic forms (rent, tax, profit, wages, equal exchange) which are evolving as capitalism has moved from an urban to a national and finally a global level.

Following the bureaucratic revolution of the late 19th century and the first world war, capitalism became, especially in the middle decades of our century, more or less synonymous with the nation-state and with Keynesian policies of demand management, “macro-economics”. Towards the end of that period, the self-organised activities of people operating beyond the reach of state regulation were identified as “the informal economy”. This was at first considered to be largely a phenomenon of Third World cities, but, in the face of waning state power, it has become a universal feature of the world economy. This dialectic of state and people is of interest as we move into the phase of virtual capitalism, a world where digitalised exchanges of money and services at distance has ushered in a growing detachment of the money circuit from the real economy of production and trade. This is the source of, and possibly the solution to, growing economic inequality. For machines now offer ordinary people the chance to be in the forefront of technological change, while remaining for the first time independent of the owners of money and landed power. In general, these chapters cast doubt on the left’s perennial belief that the demise of capitalism is imminent. But a more hopeful scenario pits the disorganised legions of “the wired” against the governments and corporations who threaten to dominate the future of the internet.

The age of money

“In the beginning all the world was America and more so than that is now; for no such thing as Money was any where known. Find out something that hath the use and value of money amongst his neighbours, you shall see the same man will begin presently to enlarge his possessions.” [ii]

We have difficulty placing ourselves reliably in the schemes we construct to make sense of history. Most often, we conflate the pace of fundamental social change with our own biological clocks, imagining that we make the world anew in our own lifetimes, while discounting the effects of long-established traditions. Commonly, modern writers have depicted a sequence in which the past was dominated by nature or the land and the future will be a society made by ourselves fairly and reasonably in the interests of all. The present, conceived of as transitional between these two states, is simultaneously the dissolvent of the past and a bridge to a better future. Its main feature is money and the buying and selling that go with it. As I have noted, this can be called the market or capitalism, according to taste. But the idea is broadly the same in either case. What varies is whether money is taken to be indispensable to the just society or anathema to it.

John Locke and Karl Marx stand as the epitome of each strand. Just as Locke has been credited with the theory underpinning the “bourgeois” revolution of property-owning or liberal democracy, Marx also has been claimed as the author of many twentieth century experiments in “socialism”. A case can be made that neither should be held responsible for the subsequent social developments they are supposed to have launched. For the philosophy and political programmes of neither thinker have yet been applied seriously in actual societies. But what concerns us here is their vision of the contradictory part played by money in human history. Certainly Marx’s idea of an economic democracy run by and for all working people is hard to deny as a long-term goal; but at one level it is a question of whether we believe that Locke’s middle-class revolution has yet run its course.

In the above quote, Locke was making his case that humanity originally lived in a state of nature, of which America was the closest contemporary example, where land was abundant and no-one benefited from hoarding more goods than they needed for their own immediate use. Money changed all that by making it possible to store surpluses in a durable form and accumulation of property, especially land, became the driving force of an increasingly unequal society. He was anxious to locate the origin of property in the state of nature and that of money in society before civil government (we might say before the centralised state). Accordingly, he made personal work the rightful source of property (the labour theory of value) and found the source of money in “fancy”, an aesthetic preference for shiny metals in exchange as opposed to real use, and eventually in “mutual consent” rather than political authority.

In the recoinage crisis of the 1690s following King William’s accession to the throne, a time when Europe’s religious war was at its height and England’s currency had been debased by civil war, criminality and corruption, money was the central plank of Locke’s political project. He had a vision of an expanding world economy with England as its leading power and guarantor. He wanted sterling to be based on fixed quantities of precious metals, which meant pulling in the present debased coinage [1] and reissuing a smaller number with metal content up to face value. The state was necessary to regulate the currency, but was not its source. Locke’s opponents, such as the London property speculator Nicholas Barbon, accused him of wishing to engineer a ruinous deflation of the national economy [2] for the sake of a few Portuguese wine merchants. They favoured the reissue of the same number of coins at a lower metal content, in a word, devaluation. But this meant acknowledging that money was little more than the creature of government policy, in the words of Barbon’s famous dictum, “money is a value made by law”. [iii] Locke wanted a state which guaranteed the property of the economically active and maintained a stable currency for international trade; he could not bring himself to sanction a policy which would effectively concede power to an implicit alliance of corrupt politicians and economic criminals. [3] He thus wanted government both to guarantee a standard of exchange and to separate that means of exchange from the aims and interests of government itself.

In retrospect it is easy enough to say that Locke’s eyes were fixed on engineering society in the interest of a class whose detractors generally tend to call it “the bourgeoisie”. I prefer the expression, “middle-class revolution”. He fought absolutist monarchy and a capricious political system dominated by the landed aristocracy (in other words, the old regime of agrarian civilisation) in the name of everyone’s natural right to accumulate property through their own efforts. In his day, the poor or those lacking any property were a bit more than half of England’s population and their purchasing power amounted to around 20% of the market economy. [iv] They would not see much of the silver coinage Locke was worried about. Compare that situation with England in the 1930s, when Keynes emerged to define another economic and political crisis and wage employment accounted for two-thirds of national income. Even in the mid-19th century when Marx was writing, the wages of workers were so low that the price of the wheat used for their bread was commonly understood to be a reliable proxy for their purchasing power.

When Locke came up with a three-stage theory of social development corresponding to the state of nature, an age of money and arbitrary political power, and constitutional government securing the property of market agents, he largely ignored the toiling masses, even though he framed his analysis and proposals as human universals. Money had to be tamed in a number of senses, but it was indispensable to the emerging 18th century world society whose contours he did more than any single person to shape. Money got humanity out of a state of nature and it had to be rescued from those whose unaccountable power allowed them to steal from productive members of society. Establishing a reliable currency was thus at once an aid to the struggle of the middle classes against landed aristocracy and part of the effort to decriminalise an informal economy running out of control.

This project may be called “liberal democracy”, a label which has been tarnished for many by the equally arbitrary accumulation of economic power it has sanctioned in its turn. This is less a condemnation of Locke than recognition of the persisting inequality of a world society driven by money and lacking adequate political safeguards for the mass of humanity. Indeed, if America was the symbol of the state of nature in Locke’s day, it has become the epitome of the age of money for us. Just as Locke confronted arbitrary state power, a money system running wild and a world lacking the guarantees of a stable and just civil society, so too do we; and America is that world’s symbol. The task of constructing a society fit for human beings to live in seems as far ahead now as it did then. But for some time, those who would do something about it have turned for inspiration not to John Locke, but to Karl Marx.

If the main object of accumulation in Locke’s time was still land, by the mid-19th century money itself, in the form of capital used to organise industrial production, had become the driving force of society. Marx began his reconstruction of human history in texts such as Precapitalist Economic Formations [v] with settled agriculture, dismissing the hunter-gatherer phase of Locke’s state of nature as a time when we were barely differentiated from the animals. All subsequent forms of society were in essence natural, emphasising reliance on the land, food production, biological reproduction (the family) and kinship-based communities dominated by father-figures. The unity of the original herd was stretched, but not broken by development towards greater complexity; and humanity, being passive in the face of nature, animated the world with spirits which became the object of religious devotion. Commerce, originating in cities, was the dissolvent of these primitive social forms and money succeeded God as the fetishised source of human agency.

Capitalism, as The Manifesto of the Communist Party [vi] makes abundantly clear, was the ruin of traditional rural society. It achieved this result by drawing people into markets not only for goods, but also for their labour. Production was separated from the land and from social forms attached to it. Market contracts individualised property ownership and social relations. Centralisation of production through widespread use of machinery concentrated the workers in urban areas. And this was the Achilles heel of capitalism, for an antidote to private property would grow out of the increased capacity of workers to organise themselves in the towns. The industrial proletariat was thus the vanguard of a society destined to arise out of the failure of capitalism’s market anarchy to meet the needs of the majority. This society would revive the solidarity of precapitalist forms (“communism”), but this time with machine production as a means of mastering nature and self-conscious reason as a counterweight to religious alienation.

Since for Marx money was more or less synonymous with the contradictory transitional phase between preindustrial and postindustrial society, how differently did he account for its origins and future, when compared with Locke? He begins Capital with a story taken from Adam Smith. [vii] The Wealth of Nations is widely taken to be the foundation of modern economics and, on this occasion, Marx saw no point in distancing himself from its origin myth. Smith considered the “propensity to truck and barter”, that is to exchange goods without money, to be part of human nature. He takes off from an example of two savages in North America exchanging beaver pelts for deerskin at a ratio of 2 to 1. [4] Money arises in stages as a way of making these exchanges more efficient. It does so by allowing the seller to buy in the future from someone other than the immediate buyer of his commodity, rather than be forced to find a buyer who is also selling what he wants. Money starts out as a commodity, such as cattle, salt or gold, which becomes specialised as a means of exchange and store of value. Marx repeats this account, even though he knew that barter in this form could not be original, since it assumes alienable private property in commodities exchanged between individuals; and that is a consequence of historical developments culminating in capitalism.

Unlike Locke, who believed that the appearance of money by itself encouraged accumulation, Marx distinguished between simple commodity exchange, where people used markets to meet their needs in use, and capitalist commodity exchange, where the aim was to increase the stock of money through profit. Finance and merchant capital, money-making through usury and trade, were as old as agrarian civilisation; but industrial capital, the use of money to hire wage labour, was recent and revolutionary, since labour was the only commodity capable of producing more than the cost of its own purchase. The penetration of money and markets into the bulk of production was the distinctive feature of the capitalist age, since in earlier forms of society they had been restricted to minor enclaves which did not impinge directly on the system of landed property and power. [5] [viii]

Marx did not wish to grant to the apologists for bourgeois revolution the right to claim for it the decisive breakthrough in human history, important though it was in forcing the initial rupture with old society. For this reason, he set out in Capital to link the system of wage-labour under capitalism to coercive extraction of the agricultural surplus from a servile labour force. Capitalist labour markets, including the reserve army of the unemployed that they generated, functioned as a source of economic coercion allowing the owners of money to exploit their workers in ways analogous to feudalism. The concept of surplus value carried this connotation at the same time as it drew attention to the fact that workers only received a portion of the value of their output, just like serfs. It may well be that Marx’s greatest contribution was to find a feudal metaphor for the idea of the job which has so dominated economic discourse in the last century. In any case, he seized readily on Locke’s labour theory of value to insist that a just society would grant control over the value of commodities to the workers who produced them, not to the owners of labour congealed in money.

Marx’s writings on how a future communist society would work are nothing like as extensive as his critique of capitalism and of its apologists, the political economists. But it would not be excessive to say that he was as hostile to money and markets as he was to the institutions of agrarian civilisation (states, religion, peasant agriculture etc). Indeed, by accepting Smith’s origin myth of money in primitive barter, he was able to make capitalism an outgrowth of old society which loosened its bonds, but remained fatally backward-looking in its social logic. This left the creation of a free and equal society to an imminent revolutionary future led by the workers. The age of money had unleashed mechanisation and the means of social mobilisation in cities; but it was not itself capable of organising a society adequate to the democratic needs of all humanity. Even if Marx left his own thoughts on communism largely implicit, his followers in the 20th century remained hostile to money and markets, preferring to rely on the administration of economic resources by bureaucratic elites and to push commercial property to the illegal margins of society.

The collapse of Stalinism a decade ago led to the triumphalist celebration of capitalism in the West. The age of money was vindicated by the defeat of its socialist antagonist. Liberal democracy, with its bulwarks of private property, the market and representative democracy, was judged to be the only player left in the game, so much so that Francis Fukuyama earned short-lived fame as the author of a book whose main thesis was roughly that Locke’s middle-class revolution had become universal and eternal. [ix] Even before the 1990s concluded, this confidence could be seen to have been severely misplaced. So where are we today and how do we place ourselves in relation to money, the key element in both Locke’s and Marx’s historical scheme? One way of approaching that question is to examine the history of capitalism, the system of making money with money, which has changed its form in the course of the last two centuries. Its left-wing detractors have anticipated its early demise throughout that period; but, with the formation of world society in our time, it may just be coming into its own.

The theory of capitalism

If, in the last chapter, I may have given the impression that mechanisation is the driving force of modern history, to do so would be to fetishise technology, to reproduce the notion that animated objects rule our world. Human beings make machines and they make them under specific social conditions. What then is the form of society organising our hectic march from the village to the city, towards the possibility of a global civilisation? Since the last century the answer has been contained in a name which is at once a description and an explanation, the favourite label for our economic dynamism, capitalism. [6] [x] Capitalism is above all that combination of money and machines whose special character underlies the polarising tendencies of our world. Even naming this process is controversial, since its apologists prefer to mask its contradictions in polite talk of “business” and “the market”.

In this section I will first examine the meaning of the term capital, showing how it is taken by some to be an objective and benign feature of human societies in general, by others a recent historical invention of dubious social value. Then I will turn to the two greatest commentators on capitalism as a general system, Marx and Weber, each of whom paid close attention to its specific origins in Europe, especially Britain. The origin of the modern economy is not, however, just a feature of western history which passed long ago, something now preserved in the dry texts of dead writers. The conditions on which it has been built are still alive, taking root in the far corners of the world, as well as being renewed in its old heartlands. Later I offer a brief account of some African examples, before returning to the original case of modern capitalist development, Britain. The point of this comparison is that universal social processes are always modified by the concrete elements of their formation in particular places.

Capital is wealth used to make more wealth. [7] [xi] Wealth is all resources having economic value. Value is worth in general, but it tends to be measured in a universal equivalent, that is, money. So the essence of capital is that it is wealth (usually money in some form) capable of increasing its value. In both popular and scientific usage, the meaning of capital shifts uneasily between a material or technical emphasis on stock (produced means of production, physical equipment, nowadays notably machines) and identification with the kind of money prevailing in modern economy. The analogy between capital increase and the natural reproduction of livestock is reinforced by the etymology of cattle which suggests an ancient link between the two terms. [8] [xii] Capitalis (of the head) means important, chief, primary and, in the neuter form (capitale), refers to significant property, such as chattels and cattle. In this broad sense then, capital, like the head, is most important to sustaining life (every body needs a head, every community a leader: hence heads and tails). [9]

The modern term capital, however, derives more specifically from a medieval banking expression (similar to the notion of “principal”) implying an amount of money which grows through accumulating interest. There are thus two opposing camps, one of whom would assimilate capitalism into a wide, natural category implying its technical basis in the domestication of plants and animals, while the other sees capitalism as a more ephemeral social arrangement devoted to making money with money. As a keyword of our civilisation, capital reflects the contrasting ideologies which have arisen to represent it. As we will see below, Marx and his followers (which includes me in this context), consistently restrict the definition of capital to its form as money. Most modern economists, however, equate capital with, in one definition, “the stock of goods which are used in production and which are themselves produced”. [xiii]

Marx viewed the piling up of riches by businessmen as a social relationship of exploitation which was mystified by equating capital with physical plant and profit with the reasonable income of its owners. For him, as for Locke, human labour was the source of wealth and the addition of machines to that labour only made it more productive. Economists, however, tend to stress the notion of sacrifice, the withdrawal of goods from immediate consumption, and the enhanced productivity of factors other than labour in which the capitalist has invested. So that increase constitutes the reward for making the sacrifice. This argument makes sense in an industrial economy where money wealth comes most reliably from investment in mechanising production. But there are forms of capital accumulation which do not necessarily involve physical plant (banking and trade, for example) and the broader usage tends to confuse money and machines by representing capital as a thing (that is, as real) and mystifying the social relations involved. The problem with the economists’ definition is that it cannot deal with historical change in the relationship between production and the circuit of money, as Marx’s dialectic can. Certainly it could not cope with the virtual capitalism of our day.

In this book, capitalism is taken to be that form of market economy in which the owners of large amounts of money get to direct the most significant sectors of production. They do so in the interest of adding to the amounts of money they already have. Competitive markets for industrial products meant that, for a time and perhaps also now, the most reliable way of making money with money lay in raising the productivity of labour through investment in machines. This is, roughly speaking, Marx’s position. So let us see how he developed it in the context of an historical analysis of Britain, the particular point of origin for the age of capitalist accumulation.

Writers from Aristotle to Polanyi have identified two distinct orientations to the market. The first is concerned with selling for money what is surplus to requirements in order to buy what one wants. Marx called this the “simple commodity circuit” (C-M-C). [10] The second, M-C-M’, where M’> M, starts with money and has the aim of realising more money through participation in the market as a “capitalist commodity circuit”.

Figure 3.1 Two Circuits of Commodities and Money

1. Simple circuit

Commodities ——— Money ——— Commodities

2. Capitalist Circuit

Money ——— Commodities ——— More Money

According to Marx, there are three main versions of this capitalist circuit. The first two are as old as markets and money: financial capital (M-M’) where profit takes the form of interest on money lent; and merchant capital (M-C-M’) where trade goods are bought cheaply to be sold dear and profit consists in the difference between buying and selling minus handling costs. In both cases the source of the money increase is mysterious, since the contribution of human work is hidden from view. The third form is distinctive to the modern age as a general economic system; and it consists in purchasing human labour for wages with the purpose of getting these workers to produce goods worth more than the cost of their hire. Marx called this industrial capital, not primarily with reference to the factories which were characteristic of the first industrial revolution; but in order to emphasise the penetration of money capital into production, whether that be agriculture, manufacturing or services.

In all agrarian societies markets were peripheral to the organisation of production. Once people routinely sold their labour for a livelihood, however, it undermined the traditional arrangements binding them to the land; more important, it vastly expanded the market since they depended on buying the means of their everyday subsistence. Moreover, only human creativity can produce goods valued at more than it costs to buy. This relationship of surplus value between owners of capital and workers held the key, in Marx’s view, to the dramatic recent increases in the rate of accumulation. At the same time, unlike the case with finance and trading capital, it became clearer that workers generated the increase accruing to the capitalist. For Marx, then, modern capitalism was that form of making money with money in which free capital was exchanged with free wage labour. He sought to account, therefore, for the process whereby people’s capacity to work was freed from the legal encumbrances of feudal agriculture and for the release of funds for investment in new forms of production. He discusses this process of “primitive accumulation” in the last section of Volume I of Capital.

Marx found that British capitalism had its origins in a long drawn-out struggle to displace the peasants from their traditional occupation of the land. The enclosure movement began in Tudor times and was still going strong in the Scottish Highlands during the 19th century. It meant that large sections of the rural poor were forced to seek hire for wages; while the landlords were able to make over privatised land to lucrative activities such as sheep farming. Employment in capitalist textile factories was a natural outcome of this conjuncture. Marx deploys his full range as a writer to depict the brutal criminality of this history. So where did the money come from to finance industrial capitalism? Marx’s answer is unequivocal: the expanded system of colonies, slavery and world trade which followed the explorations around 1500 and after. Here again he stresses villainy, the outrageous exploits of pirates and freebooters who stole the patrimony of people they often reduced to servitude. This is a key question of economic history. Did the industrial revolution rest on loot from the Third World or not? Max Weber thought that it did not; and neither do I. But this is only a secondary aspect of Marx’s argument. [11] [xiv]

Adam Smith had related profit levels to reduced costs achieved through raising the efficiency of workers; and he identified specialisation and division of labour as the best way of doing this. Marx’s great discovery was that this logic led to the introduction of more and better machines to the production process. Capitalists could stay ahead of their competitors by paying proportionately lower wages than were justified by productivity increases. The changing ratio of wage costs to investment in machinery and plant (“the organic composition of capital”) reflected this drive to cheapen unit labour costs: and its result was that centralisation of production which Marx correctly saw as the underlying trend of 19th century capitalism. But he also noticed that there were other trends; and he highlighted the alternative paths of accumulation in a long section of Volume I of Capital on absolute and relative surplus value.

It was one of Marx’s aims to demonstrate that wage slavery under capitalism was fundamentally similar to feudal serfdom. In the latter case tied agricultural workers had to hand over a proportion of their product (“surplus labour”) in some form, whether a share of their physical output, labour services or, occasionally, a money equivalent. Marx knew that feudal landlords had every interest in extracting the most they could from these workers by driving down to the limit what they retained for their own subsistence. Surplus labour becomes surplus value when workers are paid wages directly and the surplus retained by the capitalist takes the form of goods whose value is realised in the market as commodities. The most primitive type of industrial capitalism, therefore, is one in which the feudal approach is transferred to the industrial system of wage labour.

In Marx’s terminology, one tendency of capital accumulation is thus concerned with extracting absolute surplus value. This means paying workers as little as possible and making them work as many hours as possible, for example by lengthening the working day without increasing wages. We call this phenomenon “sweat shop” capitalism and it can be found anywhere that unprotected workers (often women, minorities or illegal aliens) are forced to endure low pay, long hours and oppressive conditions. The other tendency is the one we have already identified, marked by what Marx called relative surplus value, the improvement of workers’ efficiency through increased scale of co-operation, division of labour and, above all, mechanisation. This path leads to a high wage, high skill economy which Marx felt sure was the progressive side of capitalism and one which would inevitably win out in competition with the other tendency.

This distinction between absolute and relative surplus value contains one vital key to understanding the uneven development of the world economy. In most sectors of production, but some more than others (textiles, say, more than nuclear submarines), there is direct competition between low-cost and high-cost producers. Thus Britain under the Tories offended its partners in the European Union by pursuing a strategy of attracting international investment with low wage costs; in France the emphasis is on reduced hours of working and improved social benefits, whereas Germany especially is committed to improving the skills and equipment of a high cost labour force. Few doubt which of these countries has the more robust capitalism. The postwar rise of the Southeast Asian “tigers” (Hong Kong, Singapore, Korea, Taiwan) and of Japan before that began on the model of absolute surplus value and has subsequently switched to the relative path. In the meantime, the smokestack heartlands of the first industrial nations, which once led the way in machine production, now offer low-cost investment opportunities for Asian companies in a desperate attempt to regenerate employment. This restlessness of capitalism ensures that the original conditions of growth are always being renewed; there is nothing permanent about it.

It is increasingly commonplace for the two tendencies of modern capital accumulation to exist side by side in the same country. This is where formal and informal institutions dividing the labour force into high- and low-wage sectors are especially needed. Men have traditionally excluded women from better-paid work, with the consequence that the restricted areas available to them are overcrowded and poorly paid. [12] [xv] The same applies to the contrast between citizens and illegal aliens, providing the middle classes with the cheap domestic labour they need in order to pursue an affluent lifestyle. This leads to the embarrassment that President Clinton faced when trying to appoint an Attorney General who wasn’t employing illegal aliens as servants. And, of course, racial discrimination, even after emancipation from slavery, has acted as a colour bar confining black people to menial, low-wage employment. So Marx’s economic analysis, brilliant and far-reaching as it was, would not be complete without a broader framework capable of accounting for the specific ways in which inequality is institutionalised.

Max Weber did not disagree with Marx’s account, although he did think that property relations were less important than most Marxists believed; and some might count such an emphasis consistent with his decision to line up on the side of the capitalist state. He just felt that it did not go far enough. Agrarian societies and their urban enclaves had always relied on traditional certainties when organising their economies; that is, they tended to repeat what they had done in the past. Hence the relative stagnation of society and technology during the agricultural phase of human history. He surmised that a massive cultural revolution must have been necessary to persuade people to place their economic lives in the hands of capitalists whose principal orientation was to the uncertainties of future profit. It followed that capitalism should be conceived of in terms of institutions whose meaning was not just narrowly economic, but political, even religious as well.

Weber’s General Economic History was written under unusual circumstances. It was just after the first world war, when a defeated Germany was in the throes of revolution and Weber went to teach for a year at Munich. He died shortly afterwards and this book was put together from students’ notes taken on his last lecture course. Weber was a notoriously obscure writer; but this book reads easily. This transparent quality and the somewhat Marxist slant of the text may owe more to the students than to Weber’s original intentions; or it could reflect a genuine change of heart, in the face of Germany’s political calamity. However that may be, this is much the fullest account left of his explanation for the rise of capitalism.

For Weber, capitalism was an economic system based on rational enterprise. Both of these words were carefully chosen. Enterprise is something undertaken with a view to future profit. As such, it is intrinsically uncertain. Weber observed that in most economies known to history innovation was often explicitly discouraged and hedged around with magical deterrents. It was remarkable, therefore, that whole societies would commit their livelihood to the uncertainties of enterprise. As the American economist, Paul Samuelson, used to say in the introduction to his best-selling textbook, [xvi] 10 million New Yorkers go to sleep every night confident that the economy will still be there the next morning; but how do they know?

Enterprise commonly takes two forms. The first is speculative and involves people gambling on a hunch that they will win. Keynes recognised that these “animal spirits” were central to the dynamism of capitalist markets, leading to a cycle of booms and busts as herds of investors chase the latest chance for windfall profit (from the tulip craze and the South Sea bubble of the 17th and 18th centuries onwards). Weber was interested in the second form of enterprise, a form driven by the compulsion to eliminate the risks entailed in reliance on uncertain futures. Rationality is the calculated pursuit of explicit ends by chosen means. Rational enterprise, according to Weber, rests above all on the entrepreneur’s ability to calculate outcomes. For capitalism to take root, uncertainty has to be replaced, if not with certain knowledge, then with reliable calculation of the probabilities.

This explains the paradox that, while capitalists celebrate the risks of competition in their self-promoting ideologies, they will do everything in their power to avoid it in practice. Weber sets out, in the fourth and final part of the General Economic History, to show how the fledgling capitalist economy progressed by instituting the means of more reliable calculation. This meant improvements in book-keeping, working practices and technology. Above all it meant the development of a state alert to the needs of enterprises, securing their property and profits in law, stabilising the conditions of market economy, ultimately at the expense of anyone else who got in the way. Weber did not think that mercantile colonialism was a sufficient explanation for the accumulation of a European capitalist fund, since several commercial empires (such as the Phoenicians) had developed similar systems of extraction without spawning modern industry. Rather, as everyone knows, he believed that capitalist culture owed its specificity to developments in the sphere of religion.

Weber explained the origins of capitalism in Western Europe by the Reformation and before it the rationalist ethos of the Judaeo-Christian tradition. He wrote his famous Protestant Ethic and the Spirit of Capitalism on a visit to the St. Louis Great Exhibition in 1904. [xvii] It deals specifically with the “elective affinity” (Goethe’s phrase) of protestant religion and rational enterprise, that is with how each gets on partially with the other so as to produce a synergistic effect. But the last chapter of the General Economic History (“The evolution of the capitalist spirit”) covers more ground, reaching back into pre-Reformation Christianity and beyond to the Enlightenment and the secularism of the “Age of Iron”, the 19th century.

The main source of uncertainty we face is death. Traditionally the church placed responsibility for reaching the afterlife in the hands of a specialist class of experts. Protestantism, above all else, restored to individuals the right to make their own relationship with God. Weber held that rationality involved a similar form of means-end calculation, so that protestants would be supported in their economic activities by a compatible religious outlook. Sects which stressed the election of members to the afterlife (Calvinists being the favourite example) provided a measure of certainty, but perhaps also of insecurity which were transferred into the world of enterprise. Whatever the role of this factor in the origins of capitalism, Weber was gloomy about the prospects for a disenchanted world in which exploited workers could no longer fall back on hopes for a better life after death. If Marx successfully linked capital accumulation to mechanisation and the wage-labour system, these considerations of rationality, magic and religion are indispensable to an analysis of the cultural revolution affecting money and exchange in our times, as we will see.

The ongoing origins of capitalism

It can be seen from the above account that both Marx and Weber explained the origins of capitalism as the emergence of the elements which each took to be central to its definition: the free exchange of capital and labour and rational enterprise, respectively. When we turn to consider more recent developments outside Europe, the inescapable conclusion is that capitalism as a general system is always modified by the specific conditions in which it grows. Thus Italian capitalism is not Japanese capitalism is not Brazilian capitalism and so on. There is a sense in which the modern economy has become in retrospect an abstract general system enshrined in texts which have become disembodied from the living history in which they were originally created. [13] [xviii] Contemporary investigations of social realities (“ethnography”) can restore that sense of living particulars to what remains a search for the universal principles of economic organisation in our world. For we need to explain not only the common form, but also its infinite differentiation. If we wish to understand and help make economic civilisation on a planetary scale, such an exercise is indispensable. Modern anthropologists have recorded a decisive moment in history, when non-western peoples began to participate in the world economy on their own terms. In the decades after the second world war, a few of them set out to investigate the experience of economic development in the predominantly rural societies of the Third World. The most distinguished of these was Polly Hill. But, before turning to consider her work, an East African case study may serve to introduce the genre.

The Giriama are a people who live on the east coast of Kenya. They were studied in the 1970s by David Parkin whose subsequent book has the great merit of being both well written and only 100 pages long. [xix] The story is as general and as specific as all the others we will encounter. The Giriama once kept cattle and, during the colonial period, often worked as migrant labourers. Now an export market for copra (coconuts) had arisen which was attracting a new class of entrepreneurs. Palm trees had been used principally to make palm wine and this was drunk on many social occasions, especially marriages and funerals. People worked for each other on the basis of reciprocity and need, paying close attention to the kinship ties between them. Extraction of copra required the acquisition of property in coconut trees and control of an adequate labour supply. For the first, entrepreneurs had to win the support of elders who could act as witnesses to the land transactions involved. This ensured that traditional sources of authority had to be accommodated by this incipient capitalist process. Nor was labour unproblematic, since the expectation of handing over profits to an owner was not built into kinship-based labour relations. Moreover, the community at large had a diffuse interest in any such profits being spent on public ceremony, involving much consumption of palm wine, of course.

So far the story upholds Marx’s focus on the exchange of money for land and labour. But there is a Weberian element too. For some of the entrepreneurs sought to extricate themselves from the entanglements of traditional institutions by embracing a new religion. This took the form of conversion to Islam, often after consulting a diviner about dreams which revealed a calling in that direction. The great advantage of Islam was that it prohibited joining in the drinking that was such a prominent part of marriages and funerals. This may not have the cognitive force of the protestant ethic thesis; but it is clear that emancipation from the diffuse social ties of community life is compatible with greater calculation of capitalist profit.

Parkin’s narrative implies that the march of this new capitalist class is inexorable and that Giriama society is well on the way to being irreversibly transformed. But a longer-term and wider perspective might lead us to revise such a prediction. Colonial political economy was organised as a racial division of labour. The British ran the government and owned the most profitable estates; the Africans were expected to work for them and were excluded, where possible, from profitable alternatives to wage-employment. The Indians, having first been brought as indentured labour to build the ports and railways, were allowed to fill the commercial niches between the two, but were denied the right to buy land. After independence in 1962, this hierarchy of white, brown and black came under pressure, as might be expected.

The Giriama ethnography belongs then to a period when Kenya sought to establish itself as one of Africa’s leading capitalist economies, allowing for some rearrangement of the racial division of labour. [xx] For a time, redistribution of wealth and power towards some Africans induced an atmosphere of commercial prosperity. The world economy in the 1960s and early 1970s was also favourable. This climate did not last, however, and for some two decades now economic conditions have deteriorated in Kenya. This is not the first time that Africans have experienced a boom only to repent at leisure during a long recession. In the Giriama case, it is by no means obvious that the forces of nascent capitalism have triumphed in the face of conditions reinforcing traditional norms of rural self-sufficiency.

West Africa offers one of the most striking histories of indigenous capitalism in modern economic development, one, moreover, which had to wait a long time for its ethnographer. The period from the 1880s to the first world war saw an explosion in the mass production and consumption of commodities, much of it based on raw materials located in territories which were rapidly being acquired as colonies. In most cases, this meant European-owned mines (gold, copper, bauxite) and plantations (tea, rubber, oil palm) employing a mixture of local and indentured Asian labour. The cocoa industry was an exception. It arose during this period in the rainforests of the Gold Coast (now Ghana) without the benefit or knowledge of any European interest, beyond the Liverpool and Manchester traders who were happy to buy the raw material of chocolate from its indigenous producers. Although many other countries eventually joined in, Ghana still supplied almost half of the world market until its economic and political reverses of the mid-1960s.

Despite Ghana’s standing as the world’s leading cocoa producer, little was known about the indigenous producers. They were assumed to be African “peasants” earning a little extra by adding cocoa to their subsistence farms. Polly Hill, Maynard Keynes’s niece, traced the industry to its origins at the turn of the century. [xxi] She was able to show that the cocoa farmers were an authentic modern class, migrant entrepreneurs opening up virgin forest often in companies capable of hiring Swiss construction firms to develop the infrastructure that they needed and the colonial authorities could not provide.

Hill’s study, combining historical records with fieldwork, documented the complexity of the social organisation which ensued after a local man brought knowledge of cocoa from the Portuguese dependency of Sao Tome. All of the new farmers were migrants; most of them came from families which had accumulated wealth from earlier export trades, such as slavery and rubber; their level of education was often high. Some of them drew on existing matrilineal kinship to organise the collective appropriation of the rainforest; others, especially those from patrilineal areas, formed companies which allocated land rights among members. They invented a new institution, abusua, a means of recruiting migrant labourers to work on a one-third, two-thirds division of the crop. Hill is sure that Ghana’s cocoa industry was capitalist from the beginning and she is probably right. But this capitalist class did not capture the state. The first post-independence government, led by Nkrumah, was based on a coalition of interests opposed to the Ashanti region where the majority of cocoa farmers lived. Their wealth was squandered by this new ruling class, with inevitable consequences for the industry’s decline. [xxii]

It would be hard to exaggerate the contrast between Hill’s discovery and the conventional thinking of development economists and administrators at the time (and since). [xxiii] Her work has barely been absorbed into the modern anthropological tradition because it contradicts deep-seated convictions about western economic leadership and African backwardness. But more is at stake than revising racist perspectives on Africa. The core history of capitalism may have to be modified in the light of such ethnographic examples. Pierre-Philippe Rey sought to bring the West African colonial experience of capitalism and the original British case within the scope of a single theory. [xxiv] He argued that, wherever capitalism developed, the new class was forced into making compromises with the old property-owning classes in ways which made the resulting hybrid something specific to that society. Thus the British industrialists had to make an alliance with the landowning aristocracy in order for the factory system to flourish at the expense of feudal agriculture. (Compare Marx’s account of the enclosure movement above.) Similarly, in West Africa the indigenous lineage elders made an alliance with the colonial authorities to supply the labour of young men to plantations and mines.

This kind of class alliance is depressingly familiar in the transition to capitalism. It is an example of the institutional complexity which more abstract economic theories tend to ignore. In Britain, the industrial bourgeoisie was separated from the traditional landed aristocracy by regional location (North vs. South); but their influence on national government was always limited by its location in London, the home of the mercantile and colonial ruling class. In the late 19th century, the industrial civilisation of independent regional cities (led by Manchester’s liberalism) was undermined by a combination of nationalism and financial imperialism based in London. The industrial economy never recovered from this process of political centralisation.

In this brief summary of a complex history, I have come full circle. For there is no doubt that, in a life-time of journeys to strange places, nothing compares with the shock I had at the age of eighteen, when I had to alternate living as a student in Cambridge and at home in Manchester. They did seem to me, then and now, entirely different civilisations and I was much exercised by the problem of uniting them in a viable identity. Later I transposed the problem to Africa. Again I found it difficult to understand how a displaced poor boy like me could wield so much social power there. I have spent much of the time since trying to bridge that gap in my knowledge of the world. I realised that, whereas I knew life in Accra’s slums concretely, my ideas about “the West” were very abstract, being taken largely from social theory. This was the beginning of an attempt to place myself within a unified vision of world history. The preceding paragraph and indeed the historical perspective informing this book as a whole indicates where that journey has taken me so far.

In principle, it probably pays to do the same for other instances of intellectual history. Thus Weber’s sociology is inseparable from the history of the newly formed German state. Here a very different kind of story needs to be told, emphasising the alliance between Prussian junkers (a military landowning class) and the Rhineland bourgeoisie. Weber’s insistence that the institutional forms of rationality are twofold reflects the particular compromise reached in his home country, where the state bureaucracy and market-based capitalism forged an alliance which underlies the contrast between German and Anglo-Saxon models of capitalist development throughout the modern era. As pioneers of state capitalism, the Germans drew on their specific institutional history, just as the British had in inaugurating the first, market-based form of industrial capitalism. We can be sure that state capitalism’s successor is currently incubating in conditions particular to many different places. But this is to jump the gun. Before addressing the forms and consequences of global capitalist development in this century, the subject matter of Chapter 4, it is necessary to consider first its personal side, in the spirit of local differentiation emphasised here.

The personal face of capitalism: entrepreneurs

The system of making money with money, capitalism, also has a personal face. It is called entrepreneurship, a term which roughly stands for economic leadership. We have already seen that Weber thought the distinctive feature of the modern economy is enterprise, the ability to imagine and realise a future which does not already exist. This ability is a characteristic of certain individuals; and much attention has been paid in the literature to their qualities. For most writers, entrepreneurs are the heroes of capitalism, boldly going where no man went before. For others, however, they are the villains who cruelly sacrifice the general interest to their personal greed or megalomania. Bill Gates or Henry Ford earlier would be contested cases in point.

When I first became interested in this question in the 1960s, the Cold War was at its height. Supporters of American “free enterprise” held that modernisation of the former colonial peoples would come if a cluster of institutions, what I call “the middle class package”, could be successfully transplanted from the West: cities, education, science and technology, the rule of law, democracy and, of course, capitalist enterprise personified as a type, the entrepreneur. By the 1970s, however, a climate of economic failure reinforced the opposite view, that development was the primary responsibility of the state, not least because only political power could redress the inequalities intrinsic to world capitalism. In the 1980s, an unfettered western capitalism undermined its Soviet antagonist and subjected Third World states to a regime of free markets, public retrenchment and debt repayments which made survival difficult and development impossible. Finally, in the 1990s, while most Third World countries stagnate in appalling poverty, the “enterprise culture” is once again alive and well in the western heartlands, while the former eastern bloc is rapidly being taken over by its illegal variant, criminal mafias.

At the same time, the rise of Asian capitalism was until recently thought to be inexorable, led by Japan and the Southeast Asian “tigers”, with China lumbering into high gear behind. Some of these countries (Korea, Singapore) have made a virtue of strong state intervention, which may be represented as a Confucian collectivism in contrast with Western individualism. But in the West itself there has been belated recognition that relative failure may be due to a sclerosis induced by large-scale bureaucracy. And for some years now there has been a fashion for “downsizing” and “outsourcing” which at one extreme encourages small, dynamic work teams and decentralised decision-making. For a time in the 1980s, the fastest-growing region in Europe was North-Central Italy where a pattern of innovative family firms predominated. This example was used to make the claim that the big corporations were dinosaurs, too rigid to compete with enterprises organised for “flexible specialisation”, that is, able to switch production techniques at will to meet the special needs of customers. [14] [xxv]

Lately this anxiety for the future of the old Fordist model of mass production has led to pundits asking whether impersonal bureaucratic capitalism is about to be overtaken by a more personal form, “familistic capitalism”. [xxvi] This last phenomenon is held to consist of strong state intervention, high levels of political corruption, criminal mafias, reliance on personal networks in business and a dominant ethos of family enterprise. Countries like Japan and even India are brought forward as exemplars; but the idea of Asian exceptionalism is usually modified to admit the European archetype, Italy. The USA and Britain are held to be ideally “bureaucratic” (and in the latter case on the way down), although the merest acquaintance with the political and business elites of those countries might lead us to suspect that the impersonal/personal contrast is overdrawn.

What all this overgeneralised debate adds up to is a suspicion that personality and personal relations are indispensable to modern economic organisation and especially to building something new. The omnibus term “entrepreneur”, inserted into a shifting theoretical debate over capitalism’s historical trajectory, thus takes on many meanings, as we will see. The link of enterprise to the notion of the family may be in recognition of the actual predominance of families in business history. But I prefer to think of “family” as a metaphor for people you know very well and are stuck with, as it were. What matters from this point of view is not whether people are genetically related, but whether their mutual knowledge and trust can be the foundation of a durable partnership. Love and friendship can serve the same purpose, often more reliably. This aspect of the modern economy’s contradictions therefore hinges on something more diffuse than enterprise as such, namely, the personal basis for making durable economic relations.

In what follows I draw extensively on my own ethnographic researches in Ghana. [xxvii] The idea of capitalism employed here is not located in an imaginary space known as “the West”. It is global in scope and people everywhere must respond to being drawn into its complications. My study, based on fieldwork carried out thirty years ago, concerns a translocal ethnic community (“Frafras”), especially migrants from the dry savanna who lived in a slum quarter of Accra, Ghana’s capital city. Out of this field research I developed the concept of “the informal economy”. This idea refers to the mass of economic transactions which takes place beyond effective state regulation. But my first focus was on entrepreneurs. By any standards they were small fry; but I take their enterprises nevertheless to be part of the general economic movement of our times.

The value of closely observed ethnography on the margins of the world capitalist economy is that the distinction between personal and impersonal institutions is clearer there than it has become for people who have become inured to bureaucracy. The properties of relating to a person rather than to a thing or an idea have become blurred for us who barely distinguish between trusting a salesman, a dollar bill or the free market. The Frafra migrants brought a vivid appreciation of personalised social relations to their economic enterprises, just as they often missed the point of bureaucracy since the state was for them a remote, sometimes threatening presence, but not an intrinsic part of everyday life. It is now less certain than it was three decades ago that corporate investments and state guarantees offer most people a more prosperous and secure future than small-scale enterprises and intimate relationships. Thinking about this contrast in how people in different places construct the personal/impersonal pair thus has considerable salience for us today.

The Frafras were fighting hill tribesmen who grew sorghum and raised livestock, an egalitarian people huddled together in densely packed settlements. [15] [xxviii] Only a small minority had converted to Islam or Christianity and even fewer adults had a modicum of education. Their traditional society was based on descent groups, earth cults, clan alliances and marriage exchange. A pervasive ideology of kinship and ancestor worship provided the social glue linking larger corporate units to the flux of domestic life. Elders controlled most collective assets, such as land and cattle, and raiding between neighbours had traditionally reinforced group solidarity; but individual accumulation and self-made men were commonplace.

By the 1960s the Frafras were dispersed throughout Ghana. They worked as domestic servants, soldiers, petty traders and general labourers; they were widely considered to be thieves. They circulated between town and countryside, usually retaining an extended family network based on their home village. Out of a total of a quarter million, some 10,000 Frafras then lived in Accra, many of them in a sprawling slum called Nima. This was a shanty town, the main red light district for the city’s lower classes, and a criminal “badlands” which the police entered only sporadically. I lived with a “fence” (receiver of stolen goods) and joined in the life of the underworld to the extent of sharing in my landlord’s criminal enterprise. My research gravitated towards the self-organised economic activities which sustained the majority of Nima’s inhabitants. In the course of a stay of over two years, I became a local big man, redistributing my ill-gotten gains to an army of field assistants, throwing large parties and making handouts to the indigent. The alternative, non-participation in the criminal economy, left me vulnerable to accusations of being a police spy. [16] [xxix]

I was captivated by what seemed a paradox: on the one hand the banal individualism of a Dickensian mob of water carriers, bread sellers, shit shovellers, taxi drivers, pickpockets and bartenders; on the other the communal spirit of hill tribesmen whose fathers were earth priests and who expected to end their days as custodians of ancestral shrines. I was impressed by the energy and ingenuity of their efforts to enrich themselves and by the inevitable failure of all but a few. It seemed as if the economy was being made, unmade and remade from day to day. The central task for everyone was to find a durable basis for livelihood and perhaps for accumulation. That was why even a poorly paid job was valued, as a stable core in the chaos of everyday life, an island in a sea of ephemeral opportunities. I came to think of this as the search for form, for the invariant in the variable, for regularity in a world constituted by flux, emergence, informality.

Over the period of fieldwork I built up case records on 71 individuals, members of this translocal ethnic community. [17] [xxx] They lived both in the cities of the South and in their homeland. One in five had assets of more than £10,000 at a time when people working for the minimum wage earned £100 ($250) a year; half had accumulated more than £2,000 or 20 years’ unskilled work. These were substantial sums by Frafra standards, but only three were rich on a national scale. They usually maintained a diversified portfolio of investments on a part-time basis; few were committed to managing a single enterprise. In Nima a third were still employed for wages and a further half had been employed recently. The most common medium of investment was housing for rent, followed by trade, bars, construction, machinery for hire and moneylending. A third of the sample owned commercial transport, the riskiest and most lucrative form of investment. Many included an illegal element in their enterprises. There were many more Muslims and Christians than the national average for Frafras. These are some of the people I was most closely associated with in Nima.

Anaba was 40 years old, the second son of a poor farmer, and now a soldier in charge of army meat supplies. He owned five houses and nine commercial vehicles which, together with numerous trading and investment activities, brought in an annual income of around £20,000. He had 11 wives and 17 children, a household of 80 people, scores of clients and dependants. In addition to these outgoings, he financed a successful bid by his brother for the chiefship of their village. Soon afterwards he left the army and went home to farm. There he suffered a catastrophic economic decline and lost most of his wives and hangers on.

Atibila was a little older and also an army sergeant in Accra. His father had been a soldier. In his youth he had known great hardship; but, during the 1950s and 1960s, he had accumulated two houses, a mini-bus, a corn mill and several other income-bearing assets. A monogamous Christian, he lived with his wife, a trader, while his five children attended missionary schools. He tended to stay aloof from the migrant community.

Ananga left home at the age of 12. After three decades working as a cook/steward, while plying a number of ancillary trades (most of them illegal), he now lived in his own house in Nima with two wives, four children and several younger male relatives. Although at one stage he had £2,000 in the bank and owned two commercial vehicles, in the mid-1960s Ananga’s fortunes were recovering slowly after a short gaol sentence had all but smashed his entrepreneurial career. He maintained strong links with migrants from his own village.

In all relatively open economic systems it is possible for a few individuals to enrich themselves through their own efforts. The relationship between individual enrichment and community wellbeing, however, is a matter of dispute. One set of ideas is associated with the new rich themselves and those who endorse them. Success is attributed to hard work, abstinence, ambition, initiative and perseverance, perhaps to luck and a quick eye for opportunities. No-one really suffers in the process. Even if some people do get hurt, the public good is enhanced in the long run by economic growth and charitable redistribution. The opponents of the new rich tell a contrasting story: of greed, exploitation, theft, lack of scruple and numerous other anti-social vices. Wealth is seen as a transfer of value, grabbed by force or sneaked by deception. The price of such accumulation is the damage done to the community. When we turn to social theory, we find again two broad political camps corresponding roughly to the opposed ideologies set out above, often identified with Weber and Marx, respectively. Who can forget that for some forty years we were all threatened with nuclear annihilation in the name of a contest between these same ideas for global supremacy?

The problem is a general one in history. “Emphasis on accumulating money as against meeting social obligations worried many people in the United States and Europe in the early years of industrialisation. John D. Rockefeller was highly unpopular most of his life. English literature is filled with hostile references to the new men, such as Dickens’ Hard Times.” [xxxi] I wondered whether some practices of accumulation lead to the disruption of the social fabric, while others are compatible with an enduring framework of co-operation. Accordingly I examined my ethnographic material to see if perceptions of individual entrepreneurs could be traced to their objective strategies of accumulation.

“When they see this man is better”, Amoro said, “they want him to be worse; and they will always keep on coming, coming and you are giving, giving, giving. And then you will stand in the same shoes as them. You will have nothing to give and they cannot give you anything. So you are poor and that is the level they really want to bring you to.” The theme of a contradiction between accumulation and social obligation was a common one, highlighted by Atibila who simplified his life history along classic Weberian lines. He portrayed himself as a poor boy who, bereft of any help from kin and cast adrift by misfortune in Accra, had managed to pull himself up by his own bootstraps only through systematic self-denial, reliance on his wife and the rejection of all other social ties.

A soldier and a Christian, Atibila had not been home for twenty years, wanted to have nothing to do with other Frafras and sought only to provide for his conjugal nuclear family’s security through his own endeavours. He rejected traditional religion (“You cannot vote for two parties at the same time”), co-operation with kinsmen and all the institutions, like mutual aid societies and funeral parties, which promoted ethnic solidarity in the city. Rather he was a model exponent of rational economic behaviour, monogamous seclusion and personal asceticism. Atibila had not been reading Talcott Parsons at night classes. [xxxii] There was enough observable fact to make his story credible. He was certainly perceived as being socially isolated. But I later discovered that he was heavily involved with kinsmen and other Frafras; visited home regularly; wanted his children to retain their ethnic identity; and, as a lineage elder back home, had a much more equivocal attitude towards traditional religion in practice.

The point is that one-sided self-portraits, just like the ideal types of western social theory, should never be mistaken for the reality they purport to depict. Atibila identified a strong underlying tendency in his own behaviour; but he was in fact engaged in a far more complex process of seeking to reconcile a contradiction in his life without ever being able to eliminate either pole. It would be hard to overstress the importance of this theme for a humanist anthropology: people are never reducible to simple ideas, even or especially to those they hold of themselves. Rather they put together flexible combinations of opposed strategies in order to cope with the fluctuations of their lives. With this in mind, I now turn to the different strategies employed by Frafra entrepreneurs in resolving the contradiction between individual accumulation and community consumption.

The term “entrepreneur” is used in social science and history to denote a bewildering variety of types. In anthropology anyone who does something novel or manipulative, seeks profit or “maximises” his own interest is likely to be called an entrepreneur. [xxxiii] Even in economics, “Some writers have identified entrepreneurship with the function of uncertainty-bearing, others with the co-ordination of productive resources, others with the introduction of innovations and still others with the provision of capital”. [xxxiv] The classical definition, however, was designed to identify that human agency which combined the factors of production (land, labour, capital, technology) in working enterprises. Later Joseph Schumpeter concentrated on entrepreneurial innovation as the main factor in economic development. [xxxv] I use the term here to denote not even a status (never mind a class), but rather an economic role which may be only an aspect an individual’s behaviour. Entrepreneurship refers in this context to accumulation of an expanding capital fund managed by the owner. It is thus virtually synonymous with personalised capitalism.

If an entrepreneur is to maintain effective links with his community, he has to maintain a balance in his career between private accumulation and collective consumption. Not all forms of accumulation have the same social effects. The first requirement is an investible surplus. This can be generated in one of two ways: either by saving from domestic income and working more effectively or by securing a transfer of income from elsewhere. One involves producing a surplus without apparently making anyone worse off, while the other involves the circulation of value in what could be represented as a zero sum game. In the Frafra case, savings could be generated by abstention; working harder; increasing family labour inputs; improved efficiency; a stroke of good fortune. Transfers might take the form of inheritance; gift; credit; rent and interest payments; tribute; theft; favourable market trends. Finally, control over labour producing surplus value in Marx’s sense combines elements of both production and transfer. The transfer of income to the entrepreneur may not always be counted as a cost to the community. When surpluses are derived from outside or by internal methods considered legitimate, little opprobrium may be incurred.

The perceived social benefits of accumulated surpluses thus depend heavily on their source, as well as on their destination. They may be used for further investment or consumed, directly by the entrepreneur and his family or through redistribution to the community (e.g. charitable donation). Two further considerations are crucial: the time dimension and the openness of the community. Negative transfers now may be justified in terms of jam for everyone tomorrow. The more open the community the less powerful are its sanctions on members and the more difficult is assessment of the net consequences of entrepreneurial activities.

The balance between accumulation, consumption and redistribution is likely to be highly variable in an individual’s career. Moreover, not all exchanges between entrepreneurs and others are economic. A moral atmosphere of public service and political correctness may sometimes be maintained without material cost. The contradiction between public and private interests may thus be resolved in any of a number of ways: by enriching oneself at no-one else’s expense; by generating economic growth in the community and keeping up a fair level of redistribution; by adopting the symbols and conventions of community membership and service; by escaping to a more permissive or supportive social milieu; and by single-minded profit-seeking through any means, however disreputable, which is of course not a resolution of the dilemma, but rather conformity to the one-sided negative stereotype. Since people like to think of themselves as good, there are few takers for this option outside moralising fiction.

The normal platform for Frafra migrant entrepreneurship was a secure job. This could be a source of extra income (through bribes and theft of supplies); but was often intrinsic to the organisation of enterprises and to their markets. They believed with some reason that the poor only get rich by means of trickery. Certainly criminal activities were commonplace and scarcely disapproved in the community. Apart from wages and illegal enterprise, self-employment offered a bewildering variety of opportunities on Nima’s streets. Larger enterprises ranged from risky investments in public transport to the relative safety of rented housing. In addition to keeping their jobs, most entrepreneurs diversified their investments. Sudden reversals of fortune were common. A corrupt bureaucracy always posed serious obstacles to migrants who were mostly illiterate, as did the existence of monopolistic trading rings dominated by other religious and ethnic minorities. Most Frafras found it extremely difficult to hire workers who would not consume whatever money they generated: so that close family members, especially wives, were indispensable as assistants or even partners.

In general, surpluses were generated more often by transfer of value than by its production. Thrift, hard work, use of family labour and innovation were obvious enough in many cases; but the vast bulk of income came from the sphere of circulation. Moreover, most of it came from outside the Frafras’ community of origin: traders, transporters, moneylenders and thieves did their business with the general public, only a fraction of whom were their own people. A distinction was often drawn between “clean” and “dirty” money and this entered into moral exchanges within the community. Inheritance, gifts and loans played a negligible role in generating investible surpluses. There were a few instances of benevolent patronage. The poor do not have so much that they can afford to make large donations to each other; nor do the rich often transfer their wealth voluntarily to a young man in need of a lucky break. The only way the poor can acquire surpluses, short of working impossibly hard, is to fiddle a slice of the social cake to which they would not ordinarily be entitled.

There was not much conflict over the origin of surpluses; indeed the more successful entrepreneurs were usually celebrated as heroes. What really mattered was the destination of these surpluses and how the successful managed their relations with close kin and other members of the ethnic community. The problem was particularly acute in hiring labour. Strangers would disappear with the proceeds of their work; and kinsmen often failed to observe the distinction between private and communal property. Marx was right to focus on the contradiction of trying to get a worker to hand over more value than he produces. This was a cleft stick that only a few geniuses managed to escape from. Beyond that, the demands for redistribution of surpluses to family and community consumption were insistent. The egalitarian ethos of sharing was hard to reconcile with personal accumulation; and this was the site of most social conflict, as Amoro’s complaint above testifies.

The social ties of Frafra entrepreneurs to their ethnic community had varying significance at different stages of their life career. They needed lineage kin at first for the bridewealth to get married; the social security of an ethnic brotherhood and a home village to fall back on, in case the strategy of accumulation failed utterly; the co-operation of kinsmen as workers who might be more reliable than strangers. As members of a despised ethnic group, they had to look close to home for political advancement and prestige; and finally most of them were bound by the exigencies of the ancestor cult, which helps to explain why so many Frafra entrepreneurs were converts to world religions.

Unable to recruit reliable employees or partners, Frafra migrants had to secure the co-operation of kinsmen and others from their community of origin whom they felt they could trust. [18] [xxxvi] But, in order to be successful, that trust must be based on recognition of an ethic of open-ended reciprocity, sharing and mutual obligation which diverts income from investment towards the maintenance of these solidary relationships. The central paradox is the struggle to reconcile the demands of personal accumulation and social equity. The entrepreneurs considered here do not constitute a stable psychological or sociological type, but should rather be seen as persons enmeshed in a variety of social exchanges throughout their lives. Their efforts to stabilise successful adaptations were often frustrated by fluctuations in their circumstances. But it is nevertheless worth asking what alternative forms of economic organisation were available to Frafra migrants who sought a durable foundation for enterprise. Let me approach this question through two case studies from Nima.

Atia had been hawking a camera around with intermittent success: the problem was that his customers did not like to wait for the film to be completed and business was often slow. His breakthrough came when he persuaded the principal of a girls’ secondary school to let him take the girls’ photographs at weekends. Many others had tried without success; but his own “sweet” approach worked. He spent £10 on chickens, eggs and gifts of money before receiving permission. Trade was brisk: every weekend he got through two or three rolls of film “cutting” the girls. Whenever they saw him, they all wanted to send photos to their boyfriends and families. Some asked to be taken in the nude: “I was trusted by all of them. They knew that I was there for the money, that’s all. If one of them asked me to stay and do something with her, another would call for a photo before anything happened.” He generally asked for an advance payment of half the cost. Those who paid an advance wrote their names in a book, although he was himself illiterate. This was to stop any false claims; but he usually worked on the basis of mutual trust. If the photos he had developed were refused, he could not force them to pay. He rejected force, he said, because they might gang up on him and stop buying his pictures altogether. So he relied on good will. If he heard that a girl had paid for a picture she did not like and later tore it up, he would do her a new set free.

Sometimes Atia “fell down” when he spoiled the whole negative and had to refund all the advances. He claimed that his average profit was 50 percent. Good photos fetched more or less whatever he asked for. If a customer was pleased, she might not ask for change from a large banknote. He reduced his production costs by buying from the same wholesale supplier and using one enlarger, both of whom sometimes extended credit. So the profit from two films in a single weekend, although variable, could be substantial, adding up to more than a full week’s wages as a domestic servant. Later Atia had to give up photography after joining the army. He was put on a charge for spending too many weekends outside the barracks. Despite the increases in army pay after the 1966 coup, he was chronically in debt and looked with nostalgia to those secondary school weekends, as a time when he was free. Be that as it may, Atia’s enterprise was short-lived and unstable. He depended on the patronage of a headmistress and on his ability to step through a minefield of adolescent girls. Having failed to place his enterprise on a more secure footing, he fell back on a reliable job. Even so, his willingness to invent the conditions of participation in the market economy, rather than accept passively whatever its formal institutions had to offer, was typical of Frafra migrants in Nima.

At the other end of the spectrum of migrant enterprise is the transport industry. The abandoned hulks which litter Ghana’s roadsides offer silent testimony to the risks involved in running a truck, an estate wagon (“Peugeot”) or a minibus (“Benz”). But the potential rewards are high. If you buy a commercial vehicle, there are three things you can do with it: drive it yourself, hire a driver, or sell to a driver on a hire purchase basis (“work and pay”). No-one who spends his days behind a wheel is in a position to accumulate. Most naive operators would opt for hiring a driver, since the prospective profit is greater and the wage costs are fixed. This is why they often fail: a wage employee has no incentive to maintain the vehicle nor to be honest with the takings. One alternative is to make a driver pay the owner an agreed sum daily; but again he has no stake in the vehicle and there is nothing to stop him making common cause with a fitter to supply inflated repair bills or to say that the truck was off the road when it wasn’t. The most secure method is to sell the vehicle to its driver on an instalment plan and make him responsible for maintenance. This method was pioneered in Ghana by Lebanese businessmen. [xxxvii] Some owners would run the risk of paying wages to a driver while a vehicle was new and later sell it second-hand on the work-and-pay basis.

Anaba, the entrepreneur whose rags-to-riches and riches-to-rags story was mentioned above, evolved his own method of running a transport business after several false starts. He would buy driving licences for young men from his home area and let them serve an apprenticeship on someone else’s taxi until he was convinced they were a good risk. When he had enough cash in hand to buy a vehicle for £2,-3,000, he would pick out one from his pool of clients, many of whom lived in his large household. He would then write up a contract, adding £1,000 to the sale price, selling it to the driver at a rate of repayment of £10 a day, with a clause giving him the right to seize the bus if the driver missed three successive days’ payments. The driver was responsible for maintenance; but, if he got into difficulties, Anaba would pay for the repairs and add the cost to the total bill. This arrangement minimised the length of time a vehicle might lie idle. Most drivers took up to one and a half years to buy their bus or taxi. Anaba was remarkable for remaining aloof from the lorry park system in Ghana which was controlled by Muslims. Kinship ties, self-reinforcing agreements and legal contracts played a more important role in his enterprise than friendship or trust. He was not a trusting man, in contrast to Atia, the unsuccessful photographer; and this was why he preferred hire purchase over wage employment.

Three basic models presented themselves to Frafra entrepreneurs for how to go about establishing reliable economic relations in the slum. The most obvious and apparently profitable of these was the system of contract fostered by the civil society they may have thought they had joined, the middle-class package of city life whereby rational individuals enter market contracts freely and accept the binding obligations sanctioned by impersonal state laws. In practice, things turned out differently. The state was hardly an effective presence in Nima and illiterate Frafras were in a poor position to make the bureaucracy work for them. The conditions of rational calculation were subverted by a general shortage of money which pushed people into credit relations of a highly personal nature. In any case, they had to learn the impersonal disciplines of contractual behaviour from scratch and they were not very good at it (timekeeping, for instance).

Looking for some alternative form of guarantee, Frafra migrants turned to the opposite of modern civilisation, their own customary morality based on the identities of kinship and a shared language, reinforced as they were by the certainties of birth and religious community. They were in many ways preadapted to the statelessness of the slum; but it was not easy to transfer their customary rural institutions to the city. At home lineage organisation lent the full authority of ancestors to elders, fathers and husbands. The ancestor cult was never practised away from home and genealogical differences of generation were collapsed into a single brotherhood, so that the sheer unequal power of parenthood was mainly absent in the slum. Ethnic solidarity found expression in beer talk and kinship was a domestic relationship of uncertain moral provenance.

The migrant community was an egalitarian brotherhood of young men attached as clients to a few resident big men. It was not closed or powerful enough to make kinship ties reliable. In any case, kinship is a poor foundation for the reckoning of two-sided economic relations, especially hierarchical relations such as employer-employee, since it is based on an assumption of sameness, collective identity in opposition to the generalised other. The idea of shared but separate interests cannot easily be expressed in a kinship idiom. So traditional forms were ill-adapted to the needs of migrant economic life. Inevitably they fell back on free-floating association, that sphere of social relations which Mauss identified as the true locus of society, [xxxviii] where self and other meet in some reciprocal understanding and interest is negotiated within relations formed by shared experience, even friendship. Society in this sense is always personal, active and concrete, straddling as it does the poles of the primitive and the modern. The currency of this sphere is trust, a willingness to endure risk and uncertainty in human relations based on some degree of prior knowledge. Frafras were often forced to rely on an idiom of trust, although usually with the reinforcement of some other social interest. Moneylending was a case in point.

Loans in Nima were never made to strangers. Landlords lent to tenants, patrons to clients. The borrower often invoked friendship as a way of soliciting a loan; the rhetoric of familiarity was commonplace there. Kinsmen make poor borrowers since they identify the lender’s interests with their own. Again, small traders sold to strangers for cash. Once their customers became more familiar, they granted them special privileges (extras and, more important, credit). In this way trust is engendered by means of the gift, making a kind of friendship between buyer and seller, even when this was not a precondition for their association. Regular clients with substantial debts were few and traders had to pick them carefully. In this respect they were as selective as most westerners in their personal friendships. The migrants usually failed to transcend their origins as fighting hill tribesmen in the social chaos of the slum. But some of them did. It helped if they could make a break with traditional religion, for positive and negative reasons. They needed some distance from customs which hedged in personal freedom with kinship obligations on all sides.

The world religions conferred membership of new associations which lent organisation and sanctions to negotiated social relations. In Accra, Islamic brotherhoods controlled much of the intermediate business between state-regulated corporations and the informal economy of the slum. [19] [xxxix] Christians, at least the few Frafra Christians, did not join organisations relevant to their enterprises, such as the Freemasons, Rotary, Lions etc. But they were encouraged to elevate their wives to the position of friend, partner and equal (see Atibila’s story above), as an antidote to the macho complex of public familism and private patriarchy. The idea of two working as one, the ancient but often abused notion of wife as friend, was a recurrent theme in the life histories of several Christian entrepreneurs.

Most impersonal written contracts were worthless. But personal relationships are created over time; so that exchange in Nima was largely a learning process. People found out by trial and error what worked for them; and the failure rate was extremely high. Accordingly, although the market economy was what most economists would think of as competitive, ease of entry was severely restricted by the need to develop effective social tactics and techniques of information management. The contrasting cases of Atia and Anaba make it clear that there is no straightforward relationship between successful enterprise and an ability to make friends or engender trust. Anaba, the rich transport entrepreneur, relied on a combination of kinship and contract, while Atia the hustler made trust the cornerstone of his activities. Frafras relied on trust as a last resort, for good reasons. Trust is essential to dealing, as the game theorists know, with their suckers, free-riders and lemons. But the routines of productive enterprise are not easily managed by an ethos of personal freedom. Kinship and contract each offer a durable model for hierarchy and control, parental and legal sanctions respectively. This is why traditional rural society has room only on the margins for achieved relations of friendship and why trust accumulates in the cracks of mass societies organised by states and markets.

Trust is central to social life when neither traditional certainties nor modern probabilities hold: in weak states or lawless zones and in the transition to capitalism or its breakdown, especially in the mercantile sphere of circulation where credit is so important. Trust is not particularly relevant to industrial production and division of labour. In other words, trust is the negotiation of risk occasioned by the freedom of others, whom we know personally, to act against our interest in the relative absence of constraints imposed by kinship identity and legal contract. Domination and interest offer a more pervasive and durable basis for enterprise than friendship and trust. It is of some interest that, at this time when state capitalism’s certainties are on the wane, the economists have rediscovered the problem of trust. [xl]

If kinship and friendship are in some senses opposed, in several parts of the world, especially the Mediterranean and its offshoots, key social relations are a fusion of the polar types, both obligatory and free, the pseudo-familism of the kinsman/friend: the godfather, the patron and in-laws in general. Something similar is at work in religious brotherhoods and in secret societies where free associates take on the attributes of shared blood and common substance in their rituals. Again, as Durkheim insisted, [xli] contracts rest on a non-contractual element which is prior and irreducible to their logic. Hence capitalist firms do not simply rely on state-made sanctions for exploitation, but often have recourse to ideologies of paternalism and trust in their labour relations.

Real economic organisation depends on creative combinations of the types that I have highlighted here. Successful mixtures vary in their situational effectiveness. It is only the intellectuals who believe that the modern economy could ever be founded on rational choice alone or that the simple-minded identities of societies based on kinship have no room for the person or the individual. Ethnography forces us to confront the complexities of society as ordinary people live it. I hope to have shown that the ideas of kinship, contract and trust are powerful guides to our understanding of economic relations; but people like the Frafra migrants I studied some time ago are faced with the need to develop practical strategies which give them a tenuous foothold in the shifting terrain of a world which is always moving on. As the next chapter shows, the static abstractions which underpin most theories of capitalism fail to address the palpable movement manifested in the history of the last century. The main lesson of this section, to be revisited at length in Chapter 5 on the market, is that ideas move when we view them through the activities of living people.

Guide to further reading

Marx and Engels were a genuine double act. Engels deferred to his partner’s colossal ego; but he was a polymath in his own right. They wrote The Communist Manifesto (note 6) to be widely read and understood. Start there. The German Ideology, taken with Engels’ brilliant ethnography of Manchester in the 1840s, [xlii] provides the theoretical and empirical background. Marx’s Precapitalist Economic Formations (5) gives his overview of economic evolution; and the “Introduction” to Grundrisse [xliii] is perhaps the best short discussion of his method. But there is no substitute for tackling Capital Volume 1 (7). The last section, part 8, is a knockabout history of accumulation before the industrial revolution. The opening chapter is crucial, but in some important respects opaque. In my view, Parts 3-5 on absolute and relative surplus value, some 350 pages, are the most important. I would avoid commentaries which invariably have a slant particular to the author; but Anthony Giddens’s Capitalism and Modern Social Theory, on Marx, Weber and Durkheim, is reliable. [xliv] I also like Ernest Mandel’s Marxist Economic Theory, [xlv] but it is pretty idiosyncratic.

At least Marx was a practising journalist. Max Weber’s prose is often impossibly dense and his commentators are, if anything, even more ideological. The General Economic History (8) is by far his most accessible work on capitalism; read Part 4 and especially the final chapter “The evolution of the capitalist spirit” which is more comprehensive than the famous Protestant Ethic and the Spirit of Capitalism (17). Dip into his great work, Wirtschaft und Gesellchaft, in the Roth and Wittich translation, Economy and Society, not the Parsons and Henderson version, Theory of Social and Economic Organization, which is seriously flawed. Reinhard Bendix’s Max Weber: an Intellectual Portrait is the best of the American bowdlerisers of Weber. [xlvi]

For John Locke, again it is better to go to the original, Two Treatises of Government (2); but John Dunn’s Locke is a readable short introduction to the man and his philosophy. [xlvii] Macpherson’s The Political Theory of Possessive Individualism has been very influential, [xlviii] but I prefer Caffentzis’s whackier treatment of Locke’s approach to money (4).

The literature of economic anthropology is very large. I suggest you start with the four texts I have cited: Gudeman and Rivera’s Conversations in Colombia (18), Parkin’s Giriama ethnography (19), Polly Hill’s masterpiece on Ghanaian cocoa farmers (21) and my own comparative treatment of the West African literature (22). The French Marxist anthropologists are accessible through David Seddon’s translation of several important articles. [xlix] Claude Meillassoux’s seminal Gouro ethnography is not translated, nor is Pierre-Philippe Rey’s magisterial Congo study; but Meillassoux’s Maidens, Meal and Money is available in English. [l]

If anyone wants to know more about the Frafras (Tallensi) of Northern Ghana, I recommend the works cited in Note 28, especially Meyer Fortes’s classic The Web of Kinship. The anthropology of enterprise is on the whole not rewarding. The Barth collection (33) is dated but good, as is Clifford Geertz’s Peddlers and Princes. [li] The literature on trust is growing rapidly, as the West rediscovers the virtue of durable human relationships. I recommend the Gambetta volume of essays (36); Fukuyama’s massive tome asks the right questions and makes interesting comparisons, but his sociology is unreliable (26).

[1] The silver content of English coins had been reduced by clipping, counterfeit and smuggling to the point where they were no longer a standard likely to be used by international traders.

[2] Locke’s own quantity theory of money predicts that a lower supply or velocity of money would reduce market demand and prices. But his priority (as Caffentzis argues convincingly) was to stabilise the infrastructure of a national economy increasingly driven by international expansion.

[3] He was instrumental in securing the appointment of Isaac Newton to be Master of the Mint, a post where, in addition to employing his scientific talents to improve the metallic standard of coins, he could pursue counterfeiters and hang them at Tyburn. It is interesting that England’s two greatest intellectuals should have been obsessed with money in this practical way.

[4] Clearly America was still a powerful stimulus to the philosophical imagination almost a century after Locke. It is ironic that this example, taken as indicative of primitive exchange, was drawn from the contemporary North American fur trade, where scarcity of cash meant that barter was often an initial source for skins whose commodity value was ultimately determined by demand in a world market whose growth Locke had worked so hard to promote.

[5] Hence the strategy frequently adopted by the rulers of agrarian civilisations to grant control of the money complex to pariah minorities (like the Jews in medieval Europe) who lacked political and property rights. As Weber and Polanyi insisted, the market was for a long time kept outside mainstream society. Our period is historically specific for its centrality to the internal functioning of society.

[6] The term was popularised by Werner Sombart.

[7] The following section is taken largely from an article written with Louise Sperling.

[8] The Latin for money, pecunia, is derived from pecus, livestock.

[9] A major theme of Chapter 6. Compare Chapter 2 where it was suggested that the main difference between animals and plants was the possession of a brain.

[10] C = commodity: M = money; M’ = m prime (more money).

[11] West Indian writers, such as C.L.R. James and, most notably, Eric Williams

have argued the case for seeing the Atlantic slave trade as the source of Britain’s industrial capital fund.

[12] A point made strikingly by Ester Boserup in her pioneering book on Women’s Role in Economic Development.

[13] This point has been made in a vigorous and original way by Gudeman and Rivera who argue that Andean peasantries maintain as living institutions the conditions which shaped the historical context of the great texts of the modern economic tradition.

[14] Curiously, this phenomenon attracted more attention outside Italy, particularly in America, than within that country.

[15] The Frafras whom I studied both at home and as migrants to Southern cities included the Tallensi, subjects of a classic ethnographic study carried out by my Cambridge professor, Meyer Fortes in the 1930s.

[16] I was arrested four times during the course of fieldwork in Nima, twice by the police and twice by the army. The only costs I suffered from these arrests were money for bribes and, on one occasion, considerable physical damage. I did not consider the option of staying clean to be viable, at least on the evidence of the first weeks of fieldwork. After that, there was no way back. The problem then became to avoid accumulating material wealth; hence, without really trying, my assumption of the role of the redistributive entrepreneur.

[17] The next few pages are a condensation of an article I published in the 1970s entitled “Swindler or public benefactor? The entrepreneur in his community”.

[18] This next section is drawn from a much later article, “Kinship, contract and trust: the economic life of migrants in an African city slum”.

[19] They did so in ways which have been documented brilliantly for the Hausa trading diaspora by Abner Cohen.

[i] C.L.R. James and associates State Capitalism and World Revolution, Charles Kerr, Chicago, 1986 (1950)

[xxvi] F. Fukuyama Trust: the social virtues and the creation of prosperity, Hamish Hamilton, London, 1995

[xxvii] K. Hart Migrants and Entrepreneurs: a study of modernisation among the Frafras of Ghana, University of Cambridge, PhD dissertation, 1969

[xxviii] K. Hart “The economic basis of Tallensi social history in the early twentieth century”, Research in Economic Anthropology Vol. 1, JAI Press, Greenwich CT, 1978; M. Fortes The Dynamics of Clanship among the Tallensi, Oxford U.P., London, 1945; The Web of Kinship among the Tallensi, Oxford U.P., London, 1949